Beazer Homes USA (NYSE:BZH) shares jumped 20% on Monday after Dream Finders Homes (NYSE:DFH) publicly proposed acquiring the homebuilder in an all-cash deal valued at $25.75 per share.
The offer represents a premium of roughly 40% compared with Beazer’s closing price of $18.35 on May 5 and values the company at approximately $704 million based on outstanding shares.
Dream Finders Says It Has Pursued Talks Since February
Dream Finders said it had made several attempts to engage with Beazer’s management team and board of directors since February before making the proposal public.
The company, which is already among Beazer’s top 10 shareholders, stated that its board had unanimously approved the proposal and that financing support had been secured through highly confident financing letters.
Dream Finders added that it is prepared to move quickly with confirmatory due diligence while simultaneously negotiating a definitive merger agreement.
Proposal Comes Amid Weak Performance at Beazer
The bid arrives during a difficult period for Beazer Homes, which recently reported its second consecutive quarterly net loss.
The company also posted a 93% year-over-year decline in adjusted EBITDA.
Beazer’s share price had fallen around 13% since Dream Finders submitted its earlier proposal, according to the acquiring company.
Combined Company Would Rank Among Largest U.S. Homebuilders
Dream Finders said the proposed merger would create the seventh-largest homebuilder in the United States, combining complementary regional operations and housing strategies.
The company also stated that the transaction would preserve its “land-light” operating model and have limited impact on leverage levels through the use of land-banking and mezzanine equity financing structures.
Since going public in 2021, Dream Finders has completed eight acquisitions with total deployment exceeding $1 billion.
The company urged Beazer shareholders to encourage the board to engage constructively regarding the proposed transaction.